prr broker report...

Prima BioMed Ltd
Overview
Recommendation: Long Term Speculative Buy
Investment: Prima Biomed Ltd
ASX Code: PRR
Current Price: 13.5 cents
Market Cap: $87.52m
12 Month Low: 0.5 cents
12 Month High: 28 cents
12 Month Performance: +2600%
Headlines
? Prima has now commenced its Phase IIb Clinical Trial for CVac? in the United States
under the guidance of the US Food and Drug Administration (FDA).
? Prima will commence the recruiting of patients for the Phase IIb Trial within 1 ? 2 months.
These tests will be conducted on a 60 patient population across multiple centers in the
USA and Australia.
? Plans to deliver results from a larger total patient population over a shorter timeframe by
conducting concurrent trials in Europe through the European Medicines Agency (EMEA).
Company update
On Friday Prima BioMed Ltd (ASX: PRR), a company we brought to our clients attention with
a buy recommendation at 6.9 cents back in May 2009, released a letter to all shareholders
informing them of recent updates and most importantly progress with its crucial Phase IIb
Clinical Trial.
Although more of an update than an anticipated news announcement, we feel it is worth
providing our insights on this and our current stance with PRR.
Prima has had a stellar last 12 months and has time and time again achieved strategic
objectives that are crucial to this drug reaching commercialisation. We feel that this letter
provides comfort for those investors that have ridden the PRR wave, that this company is
well on its way to providing a commercially available therapy for ovarian cancer patients in
the not so distant future.
With the share price stabilizing at 14c, we see this as a good entry point for those clients that
exited Prima in the high 20?s and are looking for a possible entry again. For those that didn?t
get in on the last run up, here is the opportunity.
For those clients that have been watching the Dendreon story, you would be aware that
DNDN has its most important date yet set for the 1st May. This is the date that DNDN will be
advised by the FDA as to whether they can commercialise their drug or not.
Kinetic sees this as a huge buy catalyst for PRR. One only has to look back in time at what
happened to Prima?s share price when Dendreon announced their Phase 3 trials back in April
2009. There is no mistaking it; PRR is a huge proxy for DNDN.
Australian analysts are rating this stock a buy with a price target between 60 cents to $1.14
over the next 12 months. Don?t miss the next run!
?Kinetic Securities 9/02/2010 3 of 6
About Prima BioMed
Prima BioMed is an ASX listed Australian health care company. The Company is focused on
technologies in the fields of cancer immunotherapy and immunology. Prima?s lead product is
the CVac? ovarian cancer therapy treatment. It has completed two successful clinical trials
and is in the final stages of US FDA approval and eventual commercialisation.
The Company?s broader, long term goal is to develop commercial cancer treatment
technologies and programs for global markets.
About CVac? Ovarian Cancer Treatment
CVac? is Prima BioMed?s lead product. It is of key importance as there is a large un-met
medical need for new treatments for ovarian cancer which has a very high morbidity rate.
CVac? is a maintenance therapy administered post-surgery and post-chemotherapy to delay
relapse and control metastases.
There are currently no products available as maintenance based therapies for ovarian cancer
and the global market for ovarian cancer therapeutics was valued at US$2.1b in 2007 and is
expected to total US$3.6b by 2010.
Regulatory approval and commercialisation of CVac? is the core focus for Prima.
Why DNDN is a good comparable for PRR
Dendreon is obviously further down the road to commercialisation than PRR, as indicated by
its >US$3bn market capitalisation, however we feel that the comparison is a valid one and
also an indicator of a potential future market capitalisation for PRR much greater than the
current one. We say this for three reasons:
1) The treatment approach is similar. Provenge (DNDN?s drug) is, like CVac?, an ex vivo
dendritic cell therapy, the difference being CVac uses mannan/MUC-1 as the
stimulating agent whereas Provenge is prostatic acid phosphatise conjugated to GMCSF17.
2) The survival data seems achievable. In the Phase III data released in April 2009
Provenge extended survival in patients in the last stages of the disease by a median of
4.1 months. Given what we know about CVac? this kind of survival data seems
achievable in ovarian cancer.
3) CVac? can be administered subcutaneously, whereas Provenge is an intravenous
treatment. This gives CVac? a net advantage in terms of ease of administration and,
importantly, a theoretical efficacy advantage, since subcutaneous administration would
like speed delivery of dendritic cells to the lymph nodes.
?Kinetic Securities 9/02/2010 4 of 6
What the CVac?s? Phase IIa data told us
In CVac?s? Phase IIa trial, 21 late-stage ovarian cancer patients were studied for the
duration of response and the period in which they were disease-free, based on measurement
of CA125, a biochemical marker that oncologists traditionally use in following the progression
of ovarian cancer.
Of the 21 patients four registered a positive clinical response or stabilisation of disease, for a
19% response rate. This may not seem like much, but was actually quite an achievement
because:
1) The patients were late stage - having failed other therapies, their CA125 levels were
rising rapidly by the time they enrolled, which meant that any response rate above
10% was considered remarkable;
2) The response, when it happened, was long-lasting, ranging from 27 weeks to 44
weeks, which was significant given the low life expectancy of the patients enrolled. We
understand the average progression free interval was 127 days;
3) Around half of the patients notionally gained some benefit. The 19% response rate
was for those patients where CA125 went down or only rose slowly. Another 5 patients
registered some response to the vaccine for shorter periods, suggesting that around
half of all patients gained some benefit from the vaccine;
4) There were no safety issues as measured by ?serious adverse events?. This suggests
CVac? can deliver on being a gentler form of cancer therapy than chemo or
radiotherapy;
5) Other cancer products have had lower response rates. Provenge?s Phase II response
rate, as measured by a reduction in biomarker levels, was 16%6. This subsequently
translated into strong Phase II data on progression free intervals and overall survival.
It?s also worthwhile considering the example of Tarceva, a Roche/Genentech drug for
the treatment of non-small-cell lung cancer. That product?s worldwide annual rate of
sales is currently running at in excess of US$1.2bn7. A typical response rate for
Tarceva as a lung cancer monotherapy is in the order of 10-20%.
The path to 60 cents per share
We see a number of catalysts emerging to drive PRR?s stock price towards analyst?s price
targets over the next 12 months:
1) Recognition of the near-term nature of the story. With PRR entering Phase IIb and
Phase III trials in the near future we believe sentiment on the stock will improve as
investors realise that part of the earlier-stage risk has been taken out.
2) Commencement of the Phase IIb trial. We expect that PRR will dose the first patient in
the Phase IIb trial before 2009 is out. We see the publicity this trial is likely to garner
as attracting new investor interest in the stock.
?Kinetic Securities 9/02/2010 5 of 6
3) Progress on recruitment to the trial. As new patients are recruited into the IIb trial as
well as the European Phase III trial we expect that confidence will build regarding PRR
meeting its timelines for completion.
4) Public awareness of ovarian cancer. As a disease specific to women with a relatively
low five-year survival rate, ovarian cancer and prospective treatments for it attracts
media attention from time to time. This may help focus public attention on the
prospects for CVac?s clinical success.
5) Patent grants and Orphan Drug Designation. Not all of PRR?s intellectual property is
covered by granted patents in Europe and the US. We see future patent grants as
increasing the comfort level on the validity of PRR?s technology. Orphan Drug
Designation will also provide 7 year exclusivity in US and 10 years in Australia, New
Zealand, Japan and Europe.